Using the terms “proactive” and “reactive” when discussing risk management can leave people confused. Perhaps that’s understandable, but it shouldn’t be so — proactive and reactive risk management are indeed different things, and understanding the difference between the two is crucial to develop effective risk mitigation strategies.
Proactive and Reactive: What’s the Difference?
The basics are simple. Reactive risk management tries to reduce the damage of potential threats and speed an organization’s recovery from them, but assumes that those threats will happen eventually. Proactive risk management identifies threats and aims to prevent those events from ever happening in the first place.
Each strategy has its own activities, metrics, and behaviors that are useful in risk analysis.
Reactive Risk Management
One fundamental point about reactive risk management is that the disaster or threat must occur before management responds. Proactive risk management is all about taking preventative measures before the event to decrease its severity, and that’s a good thing to do. At the same time, however, organizations should develop reactive risk management plans that can be deployed after the event. Otherwise management is making decisions about how to respond as the event happens, which can be a costly and stressful ordeal.
There’s an obvious catch-22 with reactive risk management. Although this approach gives you time to understand the risk before acting, you’re still always one step behind the unfolding threat. Other projects will lag as you attend to the problem at hand.
Helping to Withstand Future Risks
The reactive approach learns from past or current events and prepares for future events. For example, businesses can purchase “cybersecurity insurance” to cover the costs of a security disruption. This strategy assumes that a breach will happen at some point. Once that breach does occur, the business might understand more about how to avoid future breaches, and perhaps could even tailor its insurance policies accordingly. Fundamentally, however, the organization reacts after the threat has occurred and alters its measures to prevent future potential risks.
Proactive Risk Management
As the name suggests, proactive risk management means that you identify risks before they happen and figure out ways to avoid or alleviate the risk. It seeks to reduce the hazard’s risk potential or, even better, prevent the threat altogether.
A good example here is vulnerability testing and remediation. Any organization of appreciable size is likely to have vulnerabilities in its software, which attackers could find an exploit. So regular testing (or, even better, continuous testing) can help to repair those vulnerabilities and eliminate that particular threat.
Allows for More Control Over Risk Management
Proactive management strategy gives you more control over your risk management generally. You can decide which issues should be top priorities, and what potential damage you’re willing to accept.
Proactive management also involves constant monitoring of your systems, risk processes, cybersecurity, competition, business trends, and so forth. By understanding the level of risk prior to an event, you can educate and instruct your employees on how to mitigate them.
A truly proactive approach, however, does imply that each risk is constantly monitored. It also entails regular risk reviews to update the current risk and new risks affecting the company. This approach drives management to be always aware of the direction of those risks.
What is Predictive Risk Management?
Where does predictive risk management fit in all this? As the name suggests, it’s all about predicting future risks, outcomes, and threats. Some predictive components may sound similar to proactive or reactive strategies.
Predictive risk management attempts to:
- Identify probability of risk in a situation, based on one or more variables
- Anticipate potential future risks and their probability
- Anticipate necessary risk controls
What the Prioritization of Risk Management Entails
- Risk identification
- Risk assessment
- Risk treatment (acceptance, avoidance, mitigation, transference)
- Risk monitoring
- Continuous improvement
These are the steps taken with reactive risk management. This means it’s the response to a threat or incident. It involves:
- Preventing potential risks from becoming incidents
- Mitigating damage from incidents
- Stopping small risks from worsening
- Continuing critical business functions in spite of incidents
- Evaluating each incident to solve its root cause
- Monitoring to ensure that the incident does not recur
Proactive risk management strategies include:
- Identifying existing risks to the enterprise, business unit, or project
- Developing a risk response
- Prioritizing identified risks according to the magnitude of their threat
- Analyzing risks to determine the best treatment for each
- Implementing necessary controls needed to prevent risks from becoming threats or incidents
- Monitoring the threat environment continuously.
How ZenGRC Can Help With Risk Management
It’s challenging to cover all the steps of risk management on your own. The probability of occurrence is high, and having a risk management plan minimizes the damage and which risk management strategies to use. We have another blog for additional suggestions on risk migration.
ZenGRC software is the best way to create a thorough risk management style plan. It can help whether you’re working with a reactive or proactive approach. Regardless, you can expect your business to have all assumed or unexpected threats while managing your day-to-day.
ZenGRC’s user-friendly dashboards show you in a glance which risks need mitigating and how to do it, track workflows, collect and store the documents you’ll need at audit time, and more.
Give yourself solace by trusting the only reliable way to prepare for big or small risks. Book a free demo of ZenGRC to give yourself peace of mind for your company!